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This Climate Is Surely Full of Hot Air

Sometimes the only thing to do is just state the obvious. So here goes: The climate change petition that was promoted last week as a boon for investors and for the environment has almost no chance of ever being adopted. Wait — did I say almost? I take it back. It has no chance. Zero. Zilch. None.

The petition, on the off-chance you missed it, was drawn up by Environmental Defense, the big advocacy group, and Ceres, which describes itself as “a leading coalition of investors, environmental groups and other public interest organizations working with companies to address sustainability challenges.” It asks the Securities and Exchange Commission to force companies to begin disclosing their “climate change risk” in their financial documents.

The petition was given to the media in plenty of time for reporters to write what we in the business like to call “curtain raisers,” in advance of a big news conference that was held on Tuesday. Let it never be said that environmentalists don’t know how to generate good publicity.

Of course, Attorney General Andrew M. Cuomo of New York is no slouch in that department either. A few days earlier, Mr. Cuomo sent subpoenas — that’s right: subpoenas! — to five companies who have the temerity to want to build coal-fired electric generating plants. He, too, claimed to be concerned with climate change risk.

“The increase in CO2 emissions from the operation of these units, in combination with Peabody Energy’s other coal-fired plants, will subject Peabody Energy to increased financial, regulatory and litigation risks,” he wrote in the letter to Peabody Energy, the nation’s largest coal company. He added, “We are concerned that Peabody Energy has failed to disclose material information about the increased climate risks Peabody Energy’s business faces.”

In other words, Mr. Cuomo was going a good deal further than Ceres. He was claiming that under current S.E.C. rules, companies already had a duty to disclose “climate change risk” — at least as those risks are defined by the New York attorney general’s office.

(Never mind that none of the companies in Mr. Cuomo’s sights are based in New York. As his predecessor, Eliot Spitzer, proved, when you’re the attorney general of New York State you can pretty much investigate anything you want, anywhere in the United States, so long as you can make it appear to be somehow related to investor protection.)

“If you take Exxon Mobil,” said Mindy S. Lubber, the head of Ceres, “they provide almost no analysis and disclosure of climate change as a business risk. I would argue that climate change is a huge threat to the company’s business.” She added, “The role of the S.E.C. really is about making sure companies really do know the risks and disclose them so that investors can make smart decisions.”

I realize that many of you have just put down your morning coffee in order to nod your head in approval. But I would ask you, please, hold the applause. Putting aside the fact that both the Ceres petition and the Cuomo subpoenas are feats primarily of environmental grandstanding, the real problem is that these measures, appealing though they may seem at first glance, are misleading and disingenuous. To put it more bluntly, they are an attempt to use regulation and litigation to force companies to toe the environmentist party line on global warming, and to change corporate business models in ways that are more pleasing to the environmental community. It’s environmental tyranny disguised as public policy.

By now, of course, there is no longer an argument over whether global warming is real; even Exxon Mobil is on board. (Question for William Safire: why did the phrase “global warming” morph into “climate change?” Just wondering.) The question of what this ultimately means, however, isn’t remotely settled. Andrew Logan, who directs the energy and finance programs at Ceres, said that climate change is an issue that will ultimately put the big oil companies “out of business.” He added, “We are heading towards catastrophe.”

But Gregg Easterbrook at the Brookings Institution, author of ”The Progress Paradox,” who has written lucidly over the years about environmental issues, said that it was far from certain that global warming would require radical changes, by either individuals or corporations. “Global warming is fundamentally an air pollution problem,” he said, “and in the past, air pollution problems have turned out be far cheaper to fix and much more quickly corrected than anyone thought at first.”

Indeed, Vic Svec, a spokesman for Peabody Energy, pointed out that previous furors over the pollution caused by coal-fired plants — particulate matter and sulfur dioxide — have largely been solved. Mr. Easterbrook told me that he suspected that the same would be true of carbon emissions. “Someone will invent the gizmo” that solves the problem, he said.

Whether you agree with that assessment or not, it is a legitimate point of view — and corporations have every right to hold that view, and act on it in making investments for the future. History, after all, is full of instances where the sky was supposed to be falling — and then didn’t after someone “invented the gizmo” that took care of it (Y2K, anyone?). Yet underpinning the efforts by Mr. Cuomo and Ceres is the belief that such a view is not, in fact, a legitimate basis upon which to base corporate strategy — and that companies need to be forced back into line.

Let’s look at Mr. Cuomo’s effort first, since it is the more egregious of the two. When I spoke to Eric O. Corngold, Mr. Cuomo’s executive deputy attorney general for economic justice, he took umbrage at my suggestion that his office was trying to get companies to toe some party line. “Climate change is perhaps the central issue energy companies are going to face,” he said — stating as fact something that many energy executives might well disagree with. He added, “We just want to make sure that what companies are telling investors is fair, complete and not misleading.”

So how is the attorney general conducting his investigation into corporations hoping to build coal-fired power plants? By asking for internal documents and e-mail messages that might show — let’s cross our fingers! — that executives fear bigger risks in building new coal-fired plants than they have acknowledged publicly. In other words, he wants to do to Peabody Energy what Mr. Spitzer did to Henry Blodget and Merrill Lynch.

And why is he doing this? For the same purpose that Mr. Spitzer used the Blodget e-mail: to force an industry to change its behavior. See, once he has the messages in hand, he can brandish them before the court of public opinion to “prove” that Peabody Energy is hiding the truth about the risks inherent in building coal fired plants. Of course, at least part of the risk facing Peabody Energy is the risk of being sued by environmentalists — who will use Mr. Cuomo’s “evidence” to do just that. It’s lovely the way this works, isn’t it? You investigate them for not disclosing risk, even as you’re creating the risk through your investigation.

When you think about it, Mr. Cuomo could do this to any company over any business decision he happened to disagree with. For instance, he could subpoena General Electric to investigate whether the company’s upbeat rhetoric surrounding Ecomagination, the company’s new environmental thrust, reflects its internal view. I can guarantee that he would find plenty of embarrassing “evidence” showing top-ranking officials disagreeing vehemently with the chief executive, Jeffrey R. Immelt, who essentially shoved Ecomagination down their throats. But Mr. Cuomo would never conduct such an investigation. By his lights, Ecomagination is to be encouraged, not stopped.

What’s more, when I went to Peabody Energy’s annual report, I saw a section that talked about climate change risks in the same fashion as it talked about the other risks the S.E.C. mandates in financial disclosure documents. John Hill, an analyst who follows the company for Citigroup, said, “I can tell you for a fact that the whole subject of global warming and climate change is extensively disclosed by Peabody.”

To her credit, Ms. Lubber at Ceres was at least honest enough to admit that her goal is not just to get companies to disclose more information but to change their behavior. “What gets measured gets managed,” she said. She and Mr. Logan believe that if companies were forced to lay out for investors how global warming could affect their businesses, it might then cause them to want to make their business models more environmentally friendly. “When they look more broadly at the risks,” Mr. Logan said, “they’ll start making different investment decisions.”

But, as Mr. Easterbrook asks, if the S.E.C. ever decided to act on the Ceres petition, “What do you actually disclose? What do you warn your shareholders about?” The law says that companies have to disclose anything that could have a “material adverse effect” on the business. There is simply no way of knowing right now whether global warming will have any effect at all on companies, much less a material adverse one. Looking out into the future to assess climate change risk is really little more than an exercise in public relations. Last time I looked, BP was one oil company that was big on disclosing climate change risk — when it wasn’t busy cleaning up after itself in Alaska.

When I put that question to Ms. Lubber and Mr. Logan, one of their responses was that companies needed to disclose regulatory risk — the fact that Congress is in the process of teeing up bills that will tax carbon emissions, for instance. But even that risk is impossible to gauge: there is no consensus on what bill will emerge, or when, or how much it will cost. “The unstated presumption is that punitive, onerous legislation is coming your way that will cost you a lot of money,” Mr. Easterbrook said.

In the end, both the Ceres and Cuomo efforts are little more than sideshows — but telling ones nonetheless. They presume that all right-thinking people should believe what they believe about global warming — and that therefore public policy can be built around those presumptions. They assume that the big, bad corporations must be brought to heel even as the rest of us continue to buy our S.U.V.’s and sixth iPod. They completely ignore the obvious fact that our energy needs continue to rise — and that the threat that’s actually imminent is that we won’t have enough conventional power plants to keep the country’s lights on. As they are using weapons — S.E.C. proposals; Martin Act investigation — that really have nothing to do with global warming.

If you want to attack global warming, then for goodness sake, attack global warming. But trying to force change through the bogus mechanism of “investor disclosure?” It would be funny if it weren’t so sad.

A version of this article appears in print on , on page C1 of the New York edition with the headline: This Climate Is Surely Full Of Hot Air. Order Reprints|Today's Paper|Subscribe